Once you make the leap into owning rental property, life can get a bit more complicated if you have a poor management strategy. Before or soon after taking possession, take some time to work out the details of these common property management topics:
- Accounting and banking — Setting up accounts for deposits, rental income and paying bills (separate your property investment accounts from all personal accounts as much as possible). This task will allow clear tracking of funds down the road. Sounds like a no brainier but sticking to this, can be more difficult then you think!
- Legal— The written lease, a good application for potential renters and a plan for storing all documents for the rental property are just a few factors that must be considered from a legal standpoint. Finding a good real estate lawyer was one of my first tasks since I new next to nothing about lease terms and his help in shaping a solid lease was invaluable.
- Maintenance— Not handy, don’t worry you will be once you have owned a rental property. In cases where safety and your current abilities negate a DYI approach begin building a list of trusted contractors that can step in as needed. I typically also keep a list of potential projects that can be accomplished either during a vacancy or while tenants are away (with there permission in writing),
- Communication with renters— There is a certain skill that will allow you to get along well with your rental clients. The elements of responsiveness, concern, ability to listen and draw out information and of course the proper tools of communication (email, text, phone, in person dialogue) all play their role in shaping a tenant/property owner relationship. All my negative experiences (not many) with renters started with an obvious break down in communications. In fact this break down is an early warning indicator for me to take action (lease termination at worst or a face to face meeting to see if the situation can be resolved).
There are many other categories to explore; my main point is to get organized as soon as possible so you can deal with the management of the rental units effectively. Having owned investment property for more then 18 years I can truthfully say that the first few years where the most critical in shaping how I approach managing my income properties. Using a good management strategy will decrease your learning curve and reduce negative experiences, allowing you to thrive and grow as an investment real estate owner. I plan to write often on the above topics as well as other related subjects that relate to overall rental property management. Hope you can join in and add to my pearls of wisdom!!